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The Law in Spain: Always a Good Idea to Make a Spanish Will
While you are enjoying your new home and life in Spain, it is understandable that you might not want to think too long and hard about the future, particularly about matters pertaining to your will and inheritance. However, the sooner you consider your Spanish inheritance law options, the better you understand them, and the easier the procedure becomes.
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Spanish Inheritance Law Implications... and Scenarios
If you are a non-resident property owner in Spain and you pass away without making a Spanish will, your estate will be distributed according to the Spanish Inheritance Law.
These laws are fair and sensible, but it is worth understanding the implications...
A man who dies leaving three children and a spouse, who owns just the one property where the wife is included in the title deeds as the half-owner, leaves 50 per cent of the property to her. The other half is divided equally between the three children. The title deed will then be amended accordingly to show the four names (the wife owning half, each child owning one-sixth). The widow can hold a “usufruct” of the children’s share until she dies, so they cannot force through a sale (well, they can, but the wife is entitled to live there until she passes away).
In this scenario, in accordance with Spanish inheritance law, all parties must agree and sign the deeds if the house is to be sold. Because the husband didn’t make a will, the nuanced hierarchies of the Spanish legal system come into play, and the procedure can be time-consuming, expensive and divisive.
The Benefits of Making a Spanish Will
There are three chief reasons for having a Spanish will...
Reason One: It avoids time-consuming and expensive legal issues that your heirs will have to resolve. You can – and should – make a separate will to dispose of any assets located outside Spain. A British will, for example, has no bearing on your Spanish estate.
Reason Two: Spaniards have to divide their assets equally among their heirs, and leave two-thirds of it all to their children. As a foreigner, you are exempt from this ruling and you can bequeath your assets to whoever you want. Your estate will, however, be subject to Spanish inheritance tax, which is high when left by non-residents to non-relatives. In addition, foreigners resident in Spain are subject to the same taxes on any of their worldwide estate. Therefore, making a will allows you to navigate these various taxes at your discretion.
Reason Three: Since 28 January 2018, when a modification of the law was proposed, the “first-level” (wife/husband and children), won't pay any inheritance tax up to €1 million per heir. This is applicable to both residents and non-residents in Andalucia and some other Communities of Spain.
Which communities in Spain pay this tax?
- Do not pay tax: this is the case in the Balearic Islands, Canary Islands, Asturias, Castilla- La Mancha, Galicia, Madrid, Extremadura, La Rioja, the foral territories and Murcia or has other limits for exemptions.
- Exemptions, apply limits for tax payments:
- Andalusia (More than €1,000,000 of the tax base)
- Castilla y León (More than €400,000 of the tax base)
- Aragón (minors benefit from a 100% reduction up to a maximum of 3.000.000€)
- Cantabria (100% rebate if the taxable base is less than €100,000)
- Catalonia (99% rebate up to 20%, established inversely proportional to the taxable base)
- Community of Valencia (75% rebate).
However, in each region, there are different conditions.
Four-Year Limit on Inheritance Tax
The statute of limitation on inheritance tax is four years, which means that the state cannot collect any tax on the assets you leave to your heirs more than four years after your death. If your will is lost during this period but then found and presented to the authorities by the inheritors, it is possible to re-register your assets free of inheritance tax.
Spanish law dictates that inheritance tax should be declared within six months of the date of death. This six-month period is then added to the statute of limitations, so in effect the period stretches for four years and six months.
Setting Tax Values
The official value of your assets needs to be carefully and officially determined in order for the inheritance tax declaration to be accurately calculated. Your assets might include real estate, personal belongings, automobiles, stocks and shares, life insurance and assets held in bank accounts.
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Fact Checklist
- Apply for a death certificate within 24 hours of death in order to make the inheritance process much easier.
- Inheritors should apply for (or already have) a NIE number, and will have to give power of attorney to the Spanish lawyer representing them in order to arrange it.
- Inform your intended inheritors of what you intend to bequeath them, where your title deeds are, the contact details of your lawyer and any other official piece of paperwork that they will need when you die – this will help speed up the process.
- Remember – the deceased’s bank account is frozen until the inheritance tax is paid and the will’s conditions are satisfied.
- Once the inheritors register the inheritance tax title deed at the Registrar Office, they will then have to pay the “plus valia” tax at the local town hall – the amount due depends on the number of years that have passed since the last sale of the property.
- If your heirs do not process the change of ownership of the property to their names, they cannot sell it or rent it out, so it is important for them to be aware of the legal procedures.
PLEASE NOTE: Every effort was made to check the accuracy of the information contained within our “Legal Advice” articles at the time of writing, but it may have been superseded over time. VIVA cannot accept responsibility for any errors or omissions, nor for the authenticity of any claims or statements made by third parties. We therefore strongly recommend that readers of these articles make their own thorough checks before entering into any kind of transaction. Prices and figures were correct at the time of publication but may now vary due to circumstances beyond our control. The views and opinions of editorial contributors do not necessarily reflect those of VIVA.
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